NEW YORK – Drug store operator Walgreen Co. said Wednesday it will continue to pursue Longs Drugs Stores Corp., which earlier in the day said it would not enter buyout talks with Walgreen – a move that had Longs’ largest shareholder “irate.”

Longs’ board of directors declined to enter negotiations with Walgreen, instead sticking with CVS Caremark Corp.’s offer of $71.50 per Longs share, or about $2.7 billion. Several Longs investors have refused to support the CVS offer, saying it is too low and criticizing the company for not sharing information with other potential buyers.

Walgreen offered a higher price of $75 per share, but Longs said the company did not explain how it would finance the offer, and highlighted the risks that regulators wouldn’t approve the deal due to potential antitrust law violations.

Walgreen spokesman Michael Polzin said the company believes its offer is better for Longs shareholders.

“We are disappointed with the refusal of the Longs board to discuss our superior proposal,” he said. “Longs stockholders and the marketplace as a whole have demonstrated the strong support for a transparent and fair process that more fully values the company. We remain committed to pursuing our proposal, which we believe creates superior value for our respective stockholders.”

David Heller of Advisory Research, the largest shareholder in Longs, said the firm is “irate” Longs had turned down what it says is a reasonable offer. In his view, Longs has been secretive about the sale process, and by keeping the value of its assets private, has discouraged other potential buyers from making offers.

“(The rejection is) totally unfair to all the shareholders,” he said in a telephone interview. “They are selling assets that we don’t know what they are, no else knows what they are except CVS, and they have obviously made a deal that is not in the best interests of the shareholders.”

Advisory Research has not decided if it will tender its shares in favor of the CVS bid. Another major shareholder, Pershing Square Capital Research, has said it is against the deal. The two firms combined own about 18 percent of Longs shares, and the deal requires approval from shareholders owning two-thirds of Longs stock.

In a filing with the Securities and Exchange Commission, Longs said it wanted Walgreen to assume all the regulatory risk if the buyout was approved. It said Walgreen was not willing to take that risk, and Walgreen said in July it was no longer interested in buying Longs. That changed on Friday, when the company made its unsolicited offer.

In a telephone interview, Jefferies and Co. analyst Scott Mushkin said CVS’ offer was a better deal for Longs despite the lower price. The Federal Trade Commission has already approved the CVS bid, he said, but a Walgreen-Longs deal could be tied up in reviews for close to a year.

He added that if Walgreen completed the deal, it would be forced to sell off dozens of Longs stores, particularly in the San Francisco Bay area. The SEC filing indicated that 63 percent of Longs’ northern California stores are within two miles of a Walgreen store.

Deerfield, Ill.-based Walgreen has 492 stores in California, and most of the 521 Longs stores are also in that state. Longs felt that created a significant risk that such a deal would raise antitrust concerns.

In morning trading, shares of Walnut Creek-based Longs dipped 96 cents to $75.35, indicating that investors probably expect another offer from Walgreen or another buyer, or that CVS may increase its bid. In a client note, Wachovia analyst Matthew Perry said CVS may take that step to satisfy more Longs shareholders.

As the markets traded sharply lower, CVS shares gave up 46 cents to $35.67. Walgreen stock fell $1.05, or 3.1 percent, to $32.43.

Mushkin said Walgreen is trying to prevent Woonsocket, R.I.-based CVS from taking a strong position in a key market.

“If CVS gets Longs, they already have southern California, and they will dominate northern California,” he said.